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Leveraged ETFs Giving Big Premiums for Short Trades

Jul 07, 2009 - 9:09 AM EDT

Marco Hickey submits:

With just 10 days left until the option expiration, I have crunched the numbers on some of the most popular leveraged ETFs and it looks as if they're getting some summer heat. I am the first to admit that I think these ETFs are only for traders (and are an investor's nightmare), but they are so volatile, and bring such great premiums, it is hard for a trader of options like me to resist. A very short hold of 10 days could yield you a nice return considering it is only for ten days (crunch the numbers on an annual basis).

I have developed several strategies with these leveraged ETFs which seem to return steady profits month after month, and I usually wait to implement them within the two week expiration period.

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Source: Seeking Alpha (Jul 07, 2009 - 9:09 AM EDT)